Mt. Vernon Register-News

CNHI Special Projects

February 6, 2013

Gasoline prices surge for third straight winter

(Continued)

Gasoline futures, traded on the New York Mercantile Exchange, have rocketed higher since mid-January. The price of futures contracts has risen 12% since the middle of last month.

At the same time, the price of crude oil has also been rising. Why? Not really because of supply. In fact, America's appetite for oil continues to decline while the country's domestic oil production continues to rise.

The Wall Street Journal links the rise in crude prices to pipeline problems, making it difficult to move product around the country. In other words, we have plenty of oil, we just can't get it where it needs to be. Because of that, the price rises.

Where's the demand?

If consumers were buying more gasoline, that would certainly help explain the recent rise in gasoline prices, both at the commodities market and the retail levels. But that isn't the case.

The U.S. Energy Information Administration (EIA) reports gasoline demand in the U.S. peaked in 2007. Last year's demand was a half-million barrels a day below that. Not only are people driving less, they're driving more fuel-efficient cars. Yet the amount of money they're shelling out for fuel continues to rise.

When consumers are suddenly hit with a big increase in gasoline prices, it has much the same effect as raising their taxes or cutting their pay. The effect on the economy can be toxic. In 2011 the economy was beginning to show signs of life when the large spike in gasoline prices coincided with the economy hitting what economists described as a "soft patch."

Futures prices retreat

That said, it's possible gasoline prices may level off, or perhaps even drop a few cents in the next couple of weeks. Energy traders in the futures market in recent days have begun selling their long positions. As a result, gasoline futures prices actually retreated a bit this week. Oil prices have also declined before hitting the $100 a barrel mark.

Text Only
CNHI Special Projects
  • Does Twitter need a censor?

    Twitter decided last year to make images more prominent on its site. Now, the social network is finding itself caught between being an open forum and patrolling for inappropriate content.

    August 21, 2014

  • sleepchart.jpg America’s sleep-deprived cities

    Americans might run on sleep, but those living in the country's largest cities don't appear to run on much.

    August 20, 2014 1 Photo

  • Africa goes medieval in its fight against Ebola

    As the Ebola epidemic claims new victims at an ever-increasing rate, African governments in Sierra Leone, Guinea and Liberia have instituted a "cordon sanitaire," deploying troops to forcibly isolate the inhabitants in an area containing most of the cases.

    August 18, 2014

  • Democrat? Republican? There's an app for that

    If you're a Republican, you might want to think twice before buying Lipton Iced Tea, and forget about Starbucks coffee. If you're a Democrat, put down that Reese's Peanut Butter Cup, and throw away the cylinder of Quaker Oats in your pantry.

    August 18, 2014

  • Five myths about presidential vacations

    In the nuclear age, presidents may have only minutes to make a decision that could affect the entire world. They don't so much leave the White House as they take a miniature version of it with them wherever they go.

    August 15, 2014

  • weightloss.jpg The scales of injustice: Weight loss differs between men, women

    You're not imagining it: There really are differences between the way men and women diet, lose weight and respond to exercise.

    August 13, 2014 1 Photo

  • Drug dealers going corporate

    A top federal official on Tuesday said that 105 banks and credit unions are doing business with legal marijuana sellers, suggesting that federal rules giving financial institutions the go-ahead to provide services to dealers are starting to work.

    August 13, 2014

  • wwimemorial.jpg The benefit of World War I omission on the Washington Mall

    By 1982, when the Vietnam Veterans Memorial opened on the National Mall, something had shifted in the way we remember our wars. A national memorial, prominently placed on the nation's most symbolically significant public space, came to seem like an essential dignity offered to veterans, their families and the memory of those who gave their lives. But there is an exception.

    August 11, 2014 1 Photo

  • In Japan, ramen aficionados worry their favorite dish is coming off the boil

    "The ramen boom has ended," said Ivan Orkin, a New Yorker who first traveled to Japan in the 1980s and now owns two noodle-soup restaurants in Tokyo. "A boom implies that there are new avenues and new growth to pursue, and that's not the case in Japan anymore."

    August 11, 2014

  • Ronnie Ellis: U.S. Senate race trail long and interesting

    By Ronnie Ellis/CNHI News Service

    FRANKFORT — Last week was a long one, endured under the onslaught of an awful summer cold and played out across the commonwealth. It began in Fancy Farm and ended it in Corbin with a trip to Hazard in between.

    August 9, 2014

Twitter Updates
Facebook
Stocks